Sanderson Farms, Inc. Reports Results for Fourth Quarter and Fiscal 2013
Business Wire
LAUREL, Miss. -- December 17, 2013
Sanderson Farms, Inc. (NASDAQ: SAFM) today reported resultsfor the fourth
quarter and fiscal year ended October 31, 2013.
Net sales for the fourth quarter of fiscal 2013 were $727.1 million compared
with $648.4million for the same period a year ago. For the quarter, the
Company reported net income of $45.3 million, or $1.97 per share, compared
with net income of $9.3 million, or $0.41 per share, for the fourth quarter of
fiscal 2012.
Net sales for fiscal 2013 were $2.683 billion compared with $2.386 billion for
fiscal 2012. Netincome for the year totaled $130.6million, or $5.68 per
share, compared with net income of $53.9million, or $2.35 per share, for last
year.
"The fourth quarter of fiscal 2013 marked a strong finish to a successful year
for Sanderson Farms and the poultry industry,” said Joe F. Sanderson, Jr.,
chairman and chief executive officer of Sanderson Farms, Inc. "We reported
record annual sales of $2.683 billion, a 12.4 percent increase over fiscal
2012. While poultry markets improved compared to fiscal 2012, grain prices
remained near record high levels during much of fiscal 2013 before moderating
during the fourth quarter on optimism surrounding the current year’s grain
harvest. However, the improved poultry market prices more than offset the
higher feed costs, and our margins improved significantly during fiscal 2013
compared to fiscal 2012. For the year, we sold 3.031 billion pounds of dressed
poultry, another record, compared with 2.952 billion pounds in fiscal 2012.”
According to Sanderson, overall market prices for poultry products were higher
in the fourth quarter of fiscal 2013 compared with prices a year ago, but came
down significantly from peaks earlier during the year. As measured by a simple
average of the Georgia dock price for whole chickens, prices were higher by
approximately 10.9 percent in the Company's fourth fiscal quarter compared
with the same period in fiscal 2012, and were higher by 10.4percent for the
fiscal year compared with the prior year. The Georgia Dock whole bird price
remained in record territory through all of fiscal 2013 and reflected steady
demand for the Company’s retail chill pack product during this fiscal year.
Boneless breast meat prices averaged 8.4 percent higher in the fourth quarter
than the prior-year period. For fiscal 2013, boneless prices were 15.3 percent
higher when compared with fiscal 2012. Jumbo wing prices averaged $1.43 per
pound during the fourth quarter of fiscal 2013, down 16.5 percent from the
average of $1.71 per pound during the prior-year period. Jumbo wing prices
averaged $1.50 per pound during the fiscal year, down 5.1 percent from the
average of $1.58 per pound for fiscal 2012. The average market price for bulk
leg quarters decreased approximately 1.4 percent for the quarter, and
decreased approximately 0.5 percent forfiscal 2013. The steady dark meat
prices reflect continued good export demand during the year. Cash prices for
corn and soybean meal, the Company’s primary feed ingredients, increased
duringthe year but were down 32.8 percent and 1.6 percent, respectively,
during the fourth fiscal quarter when compared with the fourth quarter a year
ago. For the year, total feed costs in broiler flocks processed were 5.7
percent higher than fiscal 2012.
“We are pleased that our profitability during fiscal 2013 allowed us
tosignificantly reduce outstanding debt and strengthen our balance sheet,”
Sanderson continued. “As a result, we are well positioned to continue our
growth strategy, and we began construction of our new poultry complex in
Palestine, Texas, in October. Operations at that new facility are scheduled to
start in the first calendar quarter of 2015, and the pounds produced in
Palestine, at full production, will represent a 16 percent increase in our
capacity.
“As of October 31, 2013, our balance sheet reflected $924.6 million in assets,
stockholders’ equity of $671.6million and net working capital of $269.2
million. Our total long-term debt at year-end was $29.4 million. A strong
balance sheet is an important advantage in our industry, especially given
today’s economic environment, and provides us with the financial strength to
not only support our growth strategy, but also to manage our operations
through challenging market conditions. We deeply appreciate the hard work and
dedication to excellence of our employees, growers and everyone associated
with our Company,” Sanderson concluded.
Sanderson Farms will hold a conference call to discuss this press release
today, December17,2013, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors
will have the opportunity to listen to a live Internet broadcast of the
conference call through the Company's Web site at www.sandersonfarms.com. To
listen to the live call, please go to the Website at least 15 minutes
earlyto register, download, and install any necessary audio software. For
those who cannot listen to thelive broadcast, an Internet replay will be
available shortly after thecall andcontinue through December 27,2013. Those
without Internet access, or who prefer to participate via telephone,may call
1-888-244-2414, access code 6917097.
Sanderson Farms, Inc. is engaged in the production, processing, marketing and
distribution of fresh and frozen chicken and other prepared food items. Its
shares trade on the NASDAQ Global Select Market under the symbol SAFM.
This press release includes forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act
of 1995, as amended. Forward-looking statements are based on a number of
assumptions about future events and are subject to various risks,
uncertainties and other factors that may cause actual results to differ
materially fromthe views, beliefs, projections and estimatesexpressed in
such statements. Theserisks, uncertainties and other factors include, but are
not limited to those discussed under“Risk Factors” inthe Company’s Annual
Report on Form 10-K for the year ended October 31,2013, and the following:
(1) Changes in the market price for the Company’s finished products and feed
grains, both of whichmay fluctuate substantially and exhibit cyclical
characteristics typically associated with commodity markets.
(2) Changes in economic and business conditions, monetary and fiscal policies
or the amount of growth, stagnation or recession in the global or U.S.
economies, either of which may affect the value of inventories, the
collectability of accounts receivable or the financial integrity of customers,
and theability of the end user or consumer to afford protein.
(3) Changes in the political or economic climate, trade policies, laws and
regulations or the domesticpoultry industry of countries to which the Company
or other companies in the poultry industry ship product, and other changes
that might limit the Company’s or the industry’s access to foreign markets.
(4) Changes in laws, regulations, and other activities in government agencies
and similar organizations applicable to the Company and the poultry industry
and changes in laws, regulations and other activities in government agencies
and similar organizations related to food safety.
(5) Various inventory risks due to changes in market conditions including, but
not limited to, the risk that market values of live and processed poultry
inventories might be lower than the cost of such inventories, requiring a
downward adjustment to record the value of such inventories at the lower of
cost or market as required by generally accepted accounting principles.
(6) Changes in and effects of competition, which is significant in all markets
in which the Company competes, and the effectiveness of marketing and
advertising programs. The Company competes with regional and national firms,
some of which have greater financial and marketing resources thanthe Company.
(7) Changes in accounting policies and practices adopted voluntarily by the
Company or required tobe adopted by accounting principles generally accepted
in the United States.
(8) Disease outbreaks affecting the production performance and/or
marketability of the Company’s poultry products, or the contamination of its
products.
(9) Changes in the availability and cost of labor and growers.
(10) The loss of any of the Company’s major customers.
(11) Inclement weather that could hurt Company flocks or otherwise adversely
affect its operations, or changes in global weather patterns that could impact
the supply and price of feed grains.
(12) Failure to respond to changing consumer preferences.
(13) Failure to successfully and efficiently start up and run a new plant or
integrate any business theCompany might acquire.
Readers are cautioned not to place undue reliance on forward-looking
statements made byoron behalf of Sanderson Farms. Each such statement speaks
only as of the day it was made. The Company undertakes no obligation to update
or to revise any forward-looking statements. Thefactors described above
cannot be controlled by the Company. When used in this press release or in the
related conference call,thewords “believes”, “estimates”, “plans”,
“expects”, “should”, “outlook”, and “anticipates” and similarexpressions as
they relate to the Company or its management are intended to
identifyforward-looking statements. Examples of forward-looking statements
include statements ofthe Company’s belief about future demand for its
products, future prices for feed grains and future production levels.
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
October 31, October 31,
2013 2012 2013 2012
(Unaudited) (Unaudited)
Net sales $ 727,061 $ 648,379 $ 2,682,980 $ 2,386,105
Costs and
expenses:
Cost of sales 624,937 612,547 2,377,055 2,212,692
Selling, general 30,345 20,325 100,247 77,097
and administrative
655,282 632,872 2,477,302 2,289,789
Operating income 71,779 15,507 205,678 96,316
Other income
(expense):
Interest income 15 8 27 17
Interest expense (1,159 ) (1,814 ) (6,136 ) (9,201 )
Other 510 0 544 (560 )
(634 ) (1,806 ) (5,565 ) (9,744 )
Income before 71,145 13,701 200,113 86,572
income taxes
Income tax expense 25,875 4,354 69,496 32,628
Net income $ 45,270 $ 9,347 $ 130,617 $ 53,944
Basic earnings per $ 1.97 $ 0.41 $ 5.68 $ 2.35
share
Diluted earnings $ 1.97 $ 0.41 $ 5.68 $ 2.35
per share
Dividends per $ 0.20 $ 0.17 $ 0.71 $ 0.68
share
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
October 31, October 31,
2013 2012
ASSETS
Current assets:
Cash and cash equivalents $ 85,563 $ 27,802
Accounts receivable, net 108,980 98,022
Inventories 205,855 235,912
Refundable income taxes 0 4,467
Deferred income taxes 478 3,945
Prepaid expenses 29,867 27,639
Total current assets 430,743 397,787
Property, plant and equipment 1,035,044 985,198
Less accumulated depreciation (546,578 ) (489,885 )
488,466 495,313
Other assets 5,436 3,353
Total assets $ 924,645 $ 896,453
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 81,418 $ 82,755
Accrued expenses 58,271 42,082
Accrued income taxes 11,055 0
Current maturities of long-term debt 10,799 10,757
Total current liabilities 161,543 135,594
Long-term debt, less current maturities 29,414 150,212
Claims payable 9,000 4,000
Deferred income taxes 53,089 56,572
Stockholders' equity:
Common stock 23,016 22,969
Paid-in capital 142,482 135,283
Retained earnings 506,101 391,823
Total stockholders’ equity 671,599 550,075
Total liability and stockholders’ equity $ 924,645 $ 896,453
SAFM-G
Contact:
Sanderson Farms, Inc.
Mike Cockrell, 601-426-1454
Treasurer & Chief Financial Officer